The term ‘Commonhold’ has been in the news a lot recently due to the ongoing discussions about re-invigorating Commonhold as an alternative to leasehold ownership. The Law Commission have published a Consultation Paper in response to concerns regarding leasehold ownership.
But what exactly is a Commonhold? Here we discuss the differences between Commonhold and Leasehold, as well as how they work and the advantages.
What is a Commonhold?
Commonhold is a type of property ownership and offers an alternative to leasehold. It works by dividing the freehold estate in commonhold land into units and common parts. Each unit holder will own the freehold of the unit. The common parts are owned by a Commonhold Association. The unit holders will be members of the Commonhold Association. A Commonhold Community Statement is drawn up which will set out how maintenance of the building and other matters concerning the building are to be dealt with. Unlike with a leasehold there is no landlord as such and the Commonhold Association will be responsible for services and maintenance of the communal areas in the building, as well as the structure itself
Differences between Commonhold and Leasehold
Commonhold ownership is far more streamlined than the traditional leasehold approach. Just take a look at this!
Advantages of Commonhold
Here are just a few of the benefits of Commonhold:
- As there is no lease to expire, the value of the property won’t reduce over the years
- More involvement in the running and maintenance of the communal areas and building’s structure
- The documentation is more standardised so the conveyancing process should be more straightforward
- More transparency when it comes to paperwork – the Commonhold Community Statement is usually written in an easily understandable way
- Able to contribute towards choosing quality contractors that fit with the committee’s budget. This means you can avoid being taken advantage of financially by landlords if you were a leaseholder.
Disadvantages of a commonhold
There are a small number of potential disadvantages to owning a Commonhold:
- Commonhold Associations could become insolvent as they will not have the right to forfeit a unit for non payment of funds.
- The statutory documents for a commonhold are ‘one size fits all’ – they’re the same for both commercial and residential commonhold schemes
- There is a chance the people in the commonhold association may not get on with one another
Are you thinking of purchasing a flat in the near future? Speak to a specialist from our Leasehold Enfranchisement team for expert property advice today: